A foreign legal entity is considered a tax resident in Romania if its place of effective management is in Romania.
If a foreign legal entity is considered a resident both in Romania and in a state that is a signatory to a double taxation avoidance convention to which Romania is a party, its residence will be established according to the provisions of that convention.
Criteria for establishing tax residency
According to art. 7 of the Fiscal Code, a foreign legal entity is any entity that is not a Romanian legal entity and any legal entity established in accordance with European legislation, but which does not have its registered office in Romania.
A resident is any Romanian legal entity or any foreign legal entity with its place of effective management in Romania. It has a full tax obligation in Romania, being subject to taxation for income obtained from any source, both in Romania and outside Romania.
Place of effective management
The place of effective management refers to the place where, unless proven otherwise, the foreign legal entity carries out operations with a real economic purpose and where at least one of the following conditions is met:
- the economic-strategic decisions necessary for the management of the activity are taken in Romania;
- at least 50% of the executive directors/members of the board of directors are Romanian residents.
Procedure for establishing tax residency
To establish tax residency, the foreign legal entity completes the Questionnaire for establishing the tax residency of the foreign legal entity with the place of effective management in Romania, available on the ANAF portal. This is submitted to the registry of the tax authority or sent by post.
Required supporting documents:
- Shareholders/associates’ decision regarding the establishment of effective management in Romania (translated and legalized);
- Updated articles of association;
- Extract from the Trade Register of the country of origin;
- Document regarding the use of the space where management is exercised;
- Contracts of executive directors/members of the board of directors. All documents in foreign languages must be translated and legalized according to Romanian law.
All documents in foreign languages must be translated and legalized according to Romanian law.
Tax authority decision
The tax authority analyzes the submitted data and documents and issues a decision within 30 days. The foreign legal entity is notified whether or not it meets the conditions for tax residency in Romania.
Tax obligations of the resident foreign legal entity If a foreign legal entity is considered resident, it has the following obligations:
- Register with ANAF within 30 days of receiving the notification;
- Submit form 016 for tax registration;
- Keep and maintain accounting records in Romania;
- Register as a corporate tax payer;
- Maintain tax residency for at least one fiscal year.